Sarwar v Alam
| Jurisdiction | England & Wales |
| Judgment Date | 19 September 2001 |
| Neutral Citation | [2001] EWCA Civ 1401 |
| Docket Number | Case No: B3/2001/1617 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 September 2001 |
[2001] EWCA Civ 1401
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHESTER COUNTY COURT
Judge Halbert
District Judge Wallace
Royal Courts of Justice
Strand,
London, WC2A 2LL
The Master of the Rolls
Lord Justice Brooke and
Lord Justice Longmore
Case No: B3/2001/1617
Representations: (i) The parties
Geoffrey Nice QC and Nicholas Bacon (instructed by Messrs Amelans for Imran Sarwar)
Peter Birts QC and Peter Goodbody (instructed by David Higginson for Muhammad Alam)
(ii) Other interested parties
Richard Drabble QC & (Mr A Cooke) (instructed by The Law Society)
Stephen Irwin QC & (Miss O Hocdsworth) and Richard Hermer (instructed by the Association of Personal Injury Lawyers (APIL))
John Leighton-Williams QC (instructed by Messrs Barlow Lyde & Gilbert for the Association of British Insurers (ABI))
Anna Guggenheim QC (instructed by A E Wyeth & Co for the Forum of Insurance Lawyers (FOIL))
Benjamin Williams (instructed by Messrs Colman Tilley Tarrant Sutton for the Motor Accident Solicitors Society (MASS))
Peter Birts QC (instructed by Messrs Beachcroft Wansbroughs for the Liability Insurers Group)
Philip Brook-Smith (instructed by Messrs Rowe Cohen for the ATE Group)
Jeremy Stuart-Smith QC (instructed by Messrs Lyons Davidson for DAS Legal Expenses Insurance Co Ltd)
Jeremy Morgan (instructed by Messrs Russell Jones & Walker for the TUC)
Summary
(This summary forms no part of the judgment of the court)
This is another appeal concerned with the new arrangements for financing the cost of personal injuries litigation which came into effect last year. Legal aid is now no longer available for most litigation of this type. In Callery v Gray, the Court of Appeal was concerned two months ago with issues relating to the appropriate size of a success fee in a conditional fee agreement made in connection with a small claim for personal injuries suffered in a road traffic accident which was settled quite quickly without any need to bring court proceedings. In that case a passenger in a car had made a claim against the driver of the other car involved in an accident. The court was also concerned with the appropriateness of taking out "after the event" ("ATE") insurance in connection with such a claim, and the reasonableness of the ATE premium claimed in that case.
The court said, however, that if a claimant making a relatively small (ie under about £5,000) claim in a road traffic accident had access to pre-existing BTE cover which appeared to be satisfactory for a claim of that size, then in the ordinary course of things he/she should be referred to the relevant BTE insurer (para 41–43). The court gave guidance as to the nature of the inquiries a solicitor should make in this class of case into the availability of BTE cover and the insurance policies and other documents the solicitor should ask the client to produce (paras 45–49). It stressed, however, that this guidance should not be treated as an inflexible code, and that the overriding principle was that the claimant, assisted by his/her solicitor, should act in a manner that was reasonable (para 50).
INDEX
| Part | Paragraph | |
| 1 | Introduction | 1 |
| 2 | The facts of the case | 5 |
| 3 | The judgments in the courts below | 8 |
| 4 | Funding options and the solicitor's duty to the client | 11 |
| 5 | The intervenors in the appeal | 18 |
| 6 | LEI/BTE insurance | 20 |
| 7 | The practice of an LEI insurer | 27 |
| 8 | The CIS/DAS arrangements | 33 |
| 9 | The conflicting concerns about BTE cover | 39 |
| 10 | The appropriateness of BTE cover for small accident claims | 41 |
| 11 | Proper practice for a solicitor inquiring about BTE cover | 45 |
| 12 | Motor accident claims where the passenger blames the driver | 52 |
| 13 | The concerns of the ATE Group and the TUC | 59 |
| 14 | How this judgment fits in with the judgment in Callery | 60 |
| 15 | Why we differ from the judge | 61 |
Lord Phillips MR : This is the judgment of the court.
Introduction
This case is a natural sequel to Callery v Gray [2001] EWCA Civ 1117 (" Callery"). Like Callery, it is concerned with a claim by a passenger who suffered personal injuries in a road traffic accident. The passenger instructed the same firm of solicitors as Mr Callery, and he also took out "after the event" ("ATE") insurance. As in Callery the claim was settled for a comparatively small sum at an early stage, without the need to institute legal proceedings. The defendant's insurers agreed to pay costs, but disputed the recoverability of the ATE premium. There was no dispute as to the reasonableness of the premium, if recoverable.
Here the similarities end. The disputes in Callery were concerned with the amount of the solicitors' success fee and with issues relating to the ATE insurance taken out by the claimant, including the amount of the ATE premium (for that issue, see Callery v Gray [2001] EWCA Civ 1246 (" Callery(No 2")). This case is concerned with "before the event" ("BTE") insurance, which did not feature in Callery.
Another distinguishing feature of the present case is that Mr Sarwar's claim was against the driver of the car in which he was travelling as a passenger, and not against the driver of a different car. The present dispute arose during the costs-only proceedings when Mr Alam's insurers disclosed for the first time that their client's motor insurance policy contained a provision for legal expenses insurance ("LEI") which might have covered a claim made by a passenger in their insured's car against their insured driver. Both the district judge and the judge on appeal held that this BTE insurance was available to Mr Sarwar, and they disallowed the cost of his ATE premium on those grounds. Mr Sarwar now appeals.
Judge Halbert made his ruling in this case on 5th July 2001, between the conclusion of the hearing in Callery and the delivery of the judgment on 17th July. Its importance was identified during the course of the inquiry conducted by Master O'Hare in Callery at the request of the court, and on the last page of his report (which is annexed to the judgment in Callery(No 2)) he revealed that he had received a submission to the effect that Judge Halbert's decision had significantly altered the dynamics of the legal expenses insurance industry. The point we now have to decide did not arise for decision in either of the Callery judgments, but once the court became aware of it, arrangements were made to expedite the hearing of the present appeal, for which Brooke LJ granted permission, as a second appeal, on 26th July. He also granted permission for a number of interested parties to intervene in the appeal. Master O'Hare was invited to assist the court as an informal assessor on the appeal, and we benefited from the advice he gave us.
The facts of the case
The facts of the case can be stated briefly. Mr Sarwar and Mr Alam live at the same address in Ashton-under-Lyne. The accident occurred on 22nd February 2000 when Mr Alam drove his car out of a side road onto a main road, colliding with another car as he did so. Liability was admitted three months later. Mr Sarwar instructed Messrs Amelans who wrote a letter before action on 15th March. It appears that Mr Alam did not forward this letter to his insurers. On 21st March Mr Sarwar told his solicitors, on inquiry, that he was not aware that any LEI policy was available to him. He then took out an ATE policy, and on 3rd April his solicitors told Mr Alam's insurers (of whose identity they were now aware) of the existence of this policy. About three weeks later they also sent them a copy of their original letter before action. On 30th October Mr Sarwar's claim was settled for £2250 together with reasonable costs. On 15th November a costs-only Part 8 claim was made pursuant to CPR 44.12A.
Mr Alam possessed a motor vehicle policy issued by the Co-operative Insurance Society Ltd ("CIS"). Section H of this policy reads, so far as is material:
"For the purposes of this Section
(1) 'We', 'us' and 'our' means DAS Legal Expense Insurance Company Limited, who administer this insurance on behalf of CIS.
(2) 'Insured Person' means you and, with your agreement…
(ii) any passenger
whilst in or on the Insured Vehicle.
If any accident occurs which results in
(2) … injury to an Insured Person
and we accept that there is reasonable prospect of a successful recovery against the negligent party we will at your request:
(i) negotiate to recover the Insured Person's uninsured losses and costs
(ii) pay costs and expenses incurred with our consent together with third party costs for which the Insured Person is responsible
…
We will not
(b) pay more than £50,000 in respect of all claims under this Section, including the legal costs of an appeal or of defending an appeal, arising from any one accident.
If claims from more than one Insured Person are involved the insurance will apply to the aggregate amount and in priority to you.
Note
1. We will be entitled to the full conduct and control of any claim or legal proceedings.
2. We will be entitled to appoint a legal representative where we regard it as necessary. An Insured Person may choose an alternative legal representative only where –
(i) we decide to commence legal proceedings or
(ii) there is a conflict of interest
Any dispute as to the choice of legal representative or the handling of a claim will be referred to an independent arbitrator who will normally be the President of the Law Society.
3. An Insured Person must not settle a claim without our agreement."
We will describe the relationship between CIS and DAS in paragraphs 33–34...
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